Keep calm and carry on

Fixed term tenancy
Tenant notice to quit
Bidding war
Rent in advance
Guarantor
Rent review clause
Refuse applicants with children
Refuse applicants on benefits
Refuse pets
Eviction without reason
Landlord database
Ombudsman service
Awaab’s law

Now
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1m
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✓
✓
✓
✓
✓
✓
✓
✗
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The table above outlines the major changes.

Fixed term tenancy will be replaced by periodic tenancy, i.e. there is not really any minimum rental period (barring the two-month notice period), which increases the risk of tenant turnover, i.e. higher risk of void, loss of income and more fees to the agent. In reality, moving is a big hassle. Unless there is a change in circumstances, most people do not like moving around and do not often move around. Some assured shorthold tenancies come with a 6-month break clause, which means even they are fixed they are only fixed for six months. And any AST contracts will automatically become periodic, rolling month by month, after the fxied term. For problematic tenants, they can make your life difficult, fixed or not. We will come to this in a bit. As to agent fee, if you have a let only contract, i.e. paying only for tenant search, then a higher turnover will cost. It is time to consider switching to a full managed relationship and one that does not charge extra for advertising, drawing up a contract, renewal or any paperwork. A genuine full managed contract with no additional (hidden) charges.

Bidding war will no longer be allowed. The property listing has to clearly state a rental amount and that is it. Landlords do not need to worry about any substantial drop in rent. Bidding war has gotten popular because of tight supply. How much you earn has more to do with economics than regulations alone, unless rent control comes back live. Here most important is the agent’s grasp of market conditions, setting a rent amount that encourages interest and swift offer without compromising the landlords' interests.

Similarly, without a rent review clause in contract does not mean you have to take a hit in rent. You can request a raise by serving an S13 notice. It does require more paperwork and more attention - any notice is only valid if served correctly. But it can be done. There is no chance of above market rent, which in fact has always been the case. Tenants can always challenge a rent increase if they find it to be out of sync with the market. Well, except it is already written into contract. But few people with the right credentials would agree to a blanket 10% increase clause every year in the first place.

Not being able to collect rent in advance, or not being able to pay rent in advance does disadvantage certain tenants, such as overseas students and new arrivals that do not meet the usual checks, such as landlord reference or a local income. The tightening of guarantors, only allowed in limited circumstances and only liable for at most six months’ rent, will have a similar impact. If your property is popular among these groups, meet with the applicants in person, ask questions and establish their credibility by seeking alternative evidence. Do not just rely on the usual checklist. Rent in advance only gives you protection for the first fixed term. If it is a rogue tenant, you will have to face the shenanigans eventually.

Better tenant vetting

This brings us to one of the three cores of landlording - tenant selection. Under the new regime, landlords cannot refuse applicants with protected characteristics such as having children or on benefits. In fact, this is not really anything new. Only more explicitly spelled out. Landlords can and should always take income into consideration in due diligence. What this highlights is the importance of careful communications.

While they cannot unreasonably refuse pets, they can ask for pet insurance to cover potential damage. And if it is a mastiff in a studio, they will be able to turn down the application.

The abolishment of Section 21, i.e. eviction without reason, has stirred up the most concern as it will be more difficult to get trouble out of the door. Well, it has always been difficult with trouble. Landlords will still be able to terminate a tenancy. They will have to serve a different notice, Section 8, under which they will be required to provide a reason. When a landlord decides to terminate a tenancy, they always have a reason. The difference is it will have to be specified. The Renters’ Rights Bill does intend to expand the grounds for possession under Section 8. Currently, Section 8 notice is served when a tenant breaks the terms of the tenancy agreement. Under the proposal, the scope will be expanded to include a change in the landlord’s circumstances, such as selling property or moving in. But they need to be more organised in going down this route, as the notice period will be longer and there are restrictions for re-letting should a property fail to sell.

Better upkeep of property

A longer notice period will give tenants more time to look for a new rental. As to those ignoring the notice and refusing to leave, manage the risk by paying more attention in the screening process. And pay more attention to the upkeep of property - the second core of landlording.

The Awaab’s law aims at forcing landlords to fix damp and mould as well as carry out emergency repairs. Emergency repairs have to be done within 24 hours. But there is not yet a timescale on addressing damp and mould. How timely is timely remains to be agreed on. It is not part of the Renters’ Rights Bill and has already a set implementation date, October 2025. The legislation was enacted and named after a two-year old boy that died due to exposure to mould in his home. Looking after the property is an integral part of landlording. Likes attract likes. A well-kept property is more likely to draw in more applications. The impact from forced repair and maintenance will be felt more in the lower end of the rental market, where the rental income may not be enough to pay for upkeep or upgrade. Make sure your agent has regular inspection included in the management fee so any issues can be dealt with promptly and there is less of a chance of a big surprise bill.

Better compliance

The remaining holy trinity is compliance.

Local councils will be given more power to investigate breaches and impose penalties. First or minor non-compliance will incur a civil penalty of up to £7,000 and serious or repeat non-compliance a civil penalty of up to £40,000. For serious and repeat non-compliance, local councils will alternatively be able to pursue a criminal prosecution with an unlimited fine. Rent repayment order will go up to 2 years' rent from 1 year. Which means if landlords make any mistake, even non-intentional or technical, tenants can make a claim for up to two years’ rent.

The numbers look scary. But again, they can be avoided by paying more attention to proper screening (lower risk of rogue behaviour), to upkeep of property (lower risk of complaints) and to compliance (lower risk of breaches).

And a more diligent agent

These are not big asks. In fact, these are all the guiding principles in our property management business. There will be less flexibility going forward for everyone for sure and some practices have to be adjusted, i.e. more work for landlords and agents. But what the government is proposing is not going to kill the rental market (though politicians do have the tendency of going overboard). Yes, it will drive more landlords to the exit, which may have the unintended consequence of keeping supply tight or tighter, and keeping rent elevated. If you are unsure about what to do or have any questions, give us a ring.